THE 2 PERCENT SOLUTION

July 21, 2009

Uninsurance is a lot like unemployment -- it happens to many people for short periods of time, but it afflicts very few people for long periods of time. In fact, of all the people who are uninsured today, less than half will be uninsured a year from now. Less than one in ten will be uninsured two years from now -- an amount equal to less than 2 percent of the nonelderly population, says John C. Goodman, President, CEO and the Kellye Wright Fellow with the National Center for Policy Analysis.

Let's concede for the sake of argument that these chronically uninsured people have a problem that warrants federal attention. If Congress doesn't keep its eye on the ball (and it is inconceivable that it will keep its eye on the ball) we can end up spending $1.5 trillion over the next 10 years and -- at the end of the day -- have no assurance that the 2 percent will actually have been helped. That works out to about $325,000 for each person who may not be helped, says Goodman.

Who exactly are the uninsured, asks Goodman? At any given time:

Roughly one-fourth of the uninsured are eligible for Medicaid or a State Children's Health Insurance Program (SCHIP), or have already enrolled and are erroneously counted as uninsured. If they are not otherwise getting free care, they can generally enroll at the time of treatment -- or even later!

More than 40 percent of the uninsured live in households with annual incomes in excess of $50,000 and presumably could pay premiums (or the employee's share of premiums) -- although there is some argument about the meaning of this number.

About one-fourth of the uninsured are immigrants, many of whom are illegal and will not be helped by health reform in any event.

Some of these categories are overlapping, however, there are two more things to keep in mind: (1) federal and state legislation has made it increasingly easy to get insurance after people get sick and (2) an enormous amount of free care is delivered to people who have no insurance. These two factors alone virtually guarantee that many people will voluntarily choose to remain uninsured so long as they are healthy, says Goodman.

Source: John C. Goodman, "The 2 Percent Solution," National Center for Policy Analysis, July 20, 2009.